NAIROBI, Kenya, Aug 12 – The Kenya Reinsurance Corporation intends to reposition itself and build capacity to offer Shariah compliant insurance products by the end of this year.
Kenya Re Managing Director Jadiah Mwarania acknowledges that this mode of insurance is rapidly gaining popularity the world over and thus the need to embrace it in order to survive and boost their bottom line.
“There is a lot of demand for this kind of insurance especially in the Middle East, North Africa and a bit of Asia and these are areas we do business so we are being Retakaful complaint so that we don’t loss business,” admitted the MD.
Islamic insurance or Takaful is gradually taking root because unlike conventional insurance model which is designed on the premise of the risk transfer model and profit maximisation, the model is a risk-and-profit sharing one that balances the interests of both the financial institutions and the customers.
As a reinsurer, Kenya Re will now assume the risks of the firms offering Islamic Insurance in what is known as Retakaful.
However, for it to offer these services, it has to meet various set out conditions and acquire regulatory approvals. For instance, a firm is not allowed to invest the Takaful premium together with premiums collected from the conventional means or invest in industries such as beer or cigarettes sectors.
As it embarks on this path, it will also need to have in place a Shariah board consisting of Muslim scholars as well as people that are well conversant with the Quran to ensure that all its products are compliant with the Islamic principles.
The establishment of this window is just one of the measures that the corporation is undertaking to grow its business and ensure a good return for its shareholders.
Another is the introduction of new business segments such as micro-insurance and political risk covers in its portfolio so as to guarantee the growth of the company.
Already, this has begun to bear fruit with the first half of the year to June 2011 registering a 13 percent growth in net profit to Sh846 million. The performance was also buoyed by a business restructuring program that the corporation has been implementing and which has seen it strengthen internal controls and increase its efficiencies.
Gross premium went up by 20 percent to Sh2.74 billion while the investment income climbed from Sh497 million to Sh699 million.
Given that Kenya Re surpassed its target for the six months to June, the MD exuded confidence that this performance would be replicated in the second half of this year in spite of the tough economic environment.
The company also has an eye on the future and intends to carry out a re-branding exercise to improve on its perception and enhance its visibility.
“It will help us reposition the corporation and give it fresh appeal,” Mr Mwarania said of the initiative which is among the several outlined to improve its worth and reputation.
With all that is happening within the company, Chairman Nelius Kariuki opined that it was proof that Kenya Re has great potential to continue delivering value to its shareholders.
“These results are testament to the success of our business strategy where we continue to aggressively market our brand of quality of service and focus to our customers,” Mrs Kariuki emphasised.
She added that although they will continue to explore for more opportunities beyond Kenya’s borders, focus will remain on the local market where they will enhance their product offerings and develop new ones in line with the market needs.